The Financial Services Commission (FSC) of South Korea confirmed in a public statement on November 5 that non-perishable tokens (NFT) are not virtual assets and will not be regulated.
The decision not to regulate the NFT was confirmed following a revision of the updated Financial Action Task Force (FATF) guidelines. An advisory report released on October 28 by the Financial Action Task Force on Money Laundering (FATF) states that “NFTs or cryptocurrencies, depending on their characteristics, are generally not considered [virtual assets].”
On November 5, an FSC representative told reporters:
“Due to the FATF’s position on NFT regulation, we will not issue rules for NFTs.”
The Korean Financial Regulatory Authority has focused on the fact that the FATF considers NFTs to be “unique and not fungible” – which of course is not an interchangeable definition – and is used as a collection item instead of as a means of payment to make a final decision.
Not everyone agrees. The South Korean Herald Corp. reports that experts in Korea believe that NFT rates can be manipulated and used for money laundering, and since they are not considered virtual assets, issuers will not be required to comply with money laundering obligations. Koreans will also not be required to pay tax on NFTs, even though they will have to pay tax on cryptocurrencies from January 2022.
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Dunamu, the parent company of the cryptocurrency exchange Upbit, which has a monopoly on cryptocurrency trading in the country, will probably be pleased with the news.
Dunamu and her new high-profile partner Hyb will enter the NFT arena with collectibles based on the popular K-pop group BTS. Hybe is the entertainment group behind the group, which recently announced that it would buy a 2.5% stake in Dunamu for $ 423.1 million. As part of the agreement, Dunamu will buy a 5.6% stake in Hybe for $ 592.4 million.